The Committee of Public Accounts has published a report which, on the basis of evidence from the Home Office and the UK Border Agency, examines the management of the work routes of the Points Based System for Immigration.

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:

"The Points Based System, introduced to manage economic migration from countries outside the EEA, is better than the visa system it replaced. But there is still a good deal of room for improvement.

We are concerned at the lack of control of workers entering Britain through the intra-company transfer system. This allows multinationals to transfer their workers to the UK and is not covered by the immigration cap. Most workers enter through this route and, for instance, tens of thousands of IT workers have been brought in through intra-company transfers at a time when UK residents with IT skills are struggling to find work.

The Agency has not got a grip on making sure that migrant workers whose visas have expired actually leave the UK. It estimates that 181,000 such workers are staying on without permission – but it can't even verify the figures, and does not try to enforce the employer's duty to ensure that the people they bring in leave when they are required to do so.

The Agency has not exercised proper checks on sponsoring employers. It has visited only one in five of those applying for licences. It does not know how many existing sponsors have been inspected and lacks the information required to take a robust risk-based approach.

The fundamental point is that the Agency lacks the management information needed to manage migrant numbers and ensure that the rules are complied with. It assures us that its planned new immigration casework system will provide the required information. We will be looking for improved performance once the new system is fully up and running, from 2013."

Margaret Hodge was speaking as the Committee published its 34h Report of this Session which, on the basis of evidence from the Home Office and UK Border Agency, examined management of the work routes of the Points Based System for immigration.

The Government's policy is to allow the migration of skilled workers to the UK to support economic growth and better public services. The Home Office has overall responsibility for immigration policy and securing the UK's border, which it discharges through the UK Border Agency (the Agency). The Agency has the hugely difficult task of designing and operating an immigration system which enables the UK to get the skills it needs, while protecting the interests of workers already resident in this country.

This report focuses on how well the Agency has achieved its objectives of an efficient and effective system for managing migration of workers from outside the European Economic Area. The Agency implemented a Points Based System (the System) in 2008, which introduced three main routes for people to come to the UK to work, replacing the previous 39 types of work visa. The System also incorporates a route for students to come to the UK to study, which we do not consider in this report but intend to examine at a later date.

The System works by awarding applicants points based on, for example, their skills, qualifications and salary and requiring them to meet a minimum points threshold. The System is objective, transparent and flexible, as the points required can be modified to respond to changing needs in the UK workforce. Decisions are also reached more quickly than under the previous visa system.

However we are concerned that the Agency has not been doing enough to protect resident workers and ensure that migrant workers and sponsoring employers comply with immigration rules. It has not monitored migrants' right to remain to make sure migrant workers leave when they are supposed to. A lack of exit controls makes this more difficult. The Agency estimates there may be 181,000 migrants still in the UK whose permission to remain has expired since December 2008.

Migrant workers with a specific job offer have to be sponsored by an employer with a sponsorship licence from the Agency. The Agency cannot tell whether its checks on these employers are effective. It visits fewer than a fifth of employers to check their compliance with immigration rules, before granting them a licence. The Agency lacks the basic information needed to take a robust risk-based approach to visiting sponsoring employers. We were surprised, for example, that the Agency does not even know how many sponsors it has visited.

Multi-national employers can send workers from outside the European Economic Area to UK branches or subsidiaries using the 'Intra-Company Transfer' route. Over half of all skilled workers entering the UK under the System with a specific job offer use the Intra-Company Transfer route, where checks are much more limited. Some two thirds of the migrants using this route work in IT, and are potentially displacing resident workers with IT skills. Unlike the other work routes, the number of workers that can enter the UK through this route is not capped, although workers have to earn above a certain amount. The Home Office has now set a minimum salary requirement for this route of £40,000 (and £24,000 for those in the UK for less than a year), to better protect the interests of resident workers.

However, this minimum salary includes living allowances and therefore does not accurately reflect salary levels. In these circumstances, some companies may use cheaper workers from outside the EEA rather than UK resident workers.

The Points Based System is rule-based and requires applicants to supply specific documentation to support their applications. Applicants, however, have needed more help to understand the rules than the Agency was expecting, with half using the helplines. The Agency introduced a policy of 'evidential flexibility', allowing caseworkers to request additional information in support of applications, to prevent applications being rejected for easily corrected mistakes; however, this is not applied consistently. We are concerned that although the Agency has a programme to improve its guidance, it does not do enough to help applicants and sponsors make accurate and compliant applications; and that too many applications are not completed within acceptable timeframes.

The Agency currently lacks the management information to manage migrant numbers effectively and ensure compliance with immigration rules. We welcome plans to introduce an integrated casework system which should provide the information necessary for dealing with these issues, and expect to see improved performance once the new casework system is fully operational from 2013.